Last year I posted both here and on Balkinization on the not-progressive-enough surcharge on top earners to help subsidize the health care coverage of the uninsured. Some critics contended that the recession would make the very well off so much worse off that concerns about inequality were outdated. Unfortunately, the trend toward more inequality has instead continued and those numbers, along with extraordinary updates, are worth considering again. Last year, I wrote:

Beneath all the sturm und drang about soaking the rich, the press should focus on three underlying realities. First, income and wealth vastly increased at the top of the distribution over the past thirty years-in part because of corporate cost savings that included denial of health coverage to millions of workers. Second, inequality itself exacerbates the health care crisis, by fueling the allocation of medical care according to profit potential, not need. Third, inequality causes health problems, because societies grow “more dysfunctional, violent, sick and sad if the gap between social classes grows too wide.” The surcharge on the rich is not some random resentment inflicted by Frenchified Madame DeFarges on America’s John Galts.

Today . . . the very well off and the superwealthy are lumped together [in the tax code]. The top bracket last year started at $357,700. Any income above that – whether it was the 400,000th dollar earned by a surgeon or the 40 millionth earned by a Wall Street titan – was taxed the same, at 35 percent. This change [from the past] is especially striking, because there is so much more income at the top of the distribution now than there was in the past.

The “Fortunate 400″ are the 400 highest earning households in the US. They made, on average, more than $263 million apiece in 2006. As a Wall Street Journal article reports, “the group’s average income tax rate – calculated as income taxes paid as a percentage of adjusted gross income – fell to 17.2%. in 2006 from 18.2% the prior year. That’s down from a high of 29.9% in 1995.”

Charles Morris’s book The Trillion Dollar Meltdown documents the longer term trend:

Between 1980 and 2005, the top tenth of the population’s share of all taxable income went from 34 percent to 46 percent, an increase of about a third. The changing distribution within the top 10 percent, however, is what’s truly remarkable. The unlucky folks in the 90th to the 95th percentiles actually lost a little ground, while those in the 95th to 99th gained a little.

Overall, however, income shares in the 90th to 99th percentile population were basically flat (24 percent in 1980 and 26 percent in 2005). Almost all the top one-tenth’s share gains, in other words, went to the top 1 percent, or the top “centile,” who doubled their share of national cash income from 9 percent to 19 percent.

Even within the top centile, however, the distribution of gains was radically skewed. Nearly 60 percent of it went to the top tenth of 1 percent of the population, and more than a fourth of it to the top one-hundredth of 1 percent of the population. Overall, the top tenth of 1 percent more than tripled their share of cash income to about 9 percent, while the top one-hundredth of 1 percent, or fewer than 15,000 taxpayers, quadrupled their share to 3.6 percent of all taxable income. Among those 15,000, the average tax return reported $26 million of income in 2005, while the take for the entire group was $384 billion.

A truly progressive health surcharge would take that fractal inequality into account. But we may as well support the small step towards that PPACA represents. Inequality continues to intensify in the US, as I noted recently in a post at Concurring Opinions:

The Ten Million Dollar-per-week Club

Many commentators on inequality have focused on bonus culture at financial firms. Finance professionals do represent about 18% of taxpayers in the top tenth of one percent, as Bakija & Heim have shown. (In 2005, the minimum income for joining the top 0.1% was $1,246,000.) But Bakija & Heim also found that “executives, managers, and supervisors” at nonfinancial firms made up about 41% of the top 0.1% earners. And when we look at recent payroll tax data, as David Cay Johnston has, the unequal share of income at the very top of this rarefied group is nothing less than spectacular:

The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story. The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay! . . . . Since 1980, the bottom 90 percent of Americans have seen their incomes go nowhere, while on the highest steps of the income ladder, the further up you are, the greater your gains.

Johnston’s analysis is worth reading in full. We’re moving from a “winner take all society” to a “winner take all politics,” as Hacker and Pierson have shown. Many in the ostensibly populist “Tea Party” resist any taxes to address this inequality, while somehow the “left” position seems unable to distinguish between the taxation of a surgeon making $400,000 and a tycoon making $400,000,000. Indeed, the main goal of some key Clinton and Obama era advisors seems to be to join the club: Robert Rubin collected more than $115 million in compensation.

We often hear about “shared sacrifice” today. If we don’t see more graduated income tax rates at the very top, it will be difficult to resist the suspicion that “austerity” is a guise for, once again, increasing the share of national income at the very top.